The Army developed its fiscal
year 1976 budget at a time when the lingering effects of the Vietnam War, the
telling lessons of the 1973 Arab-Israeli War, the heavy weight of inflation,
and the disarming influences of peacetime conditions were all being felt. The
huge quantities of equipment and supplies that had been transferred to the South
Vietnamese upon U.S. withdrawal from Southeast Asia had been amassed to a great
extent at the expense of departing American units. Further demands had been
levied upon U.S. stocks at home and abroad to help Israel counter a major Arab
assault, and the effective performance of Russian weaponry in Arab hands held
serious implications for Western nations across the military board. Inflationary
pressures of global spread inhibited government operations in every field of
activity, and an absence of war offered inviting opportunities to defer to economic
pressures by lightening the national security load. But no nation exists in
a vacuum, and countering the temptations to relax were the hard realities of
global tensions and the widespread Soviet threat, as well as the imperative
that no military force can stand still.

In the 1976 fiscal year the
Army requested appropriations equal to 6 percent of the Federal budget and 24
percent of the Defense budget to stabilize the Army while shaping it, at least
for the near term, into the “16-and-8” division force outlined in Chapter II.
Woven into the pattern were continuing actions to increase combat power and
readiness within the 785,000 strength set for the ground forces and strong representations
for the congressional funding and manning stability that would make it possible
to maintain a cohesive force and balance peacetime efficiency with wartime effectiveness.

Keeping the Army housed,
fed, supplied, equipped, and maintained is a logistic undertaking of the first
magnitude, for the logistic function embraces numerous activities in the fields
of management, production, procurement, maintenance, transportation, construction,
and facilities. In 1976 the Army had to coordinate the availability of arms
with the availability of new combat people, replace materiel lost through diversions
to allies, continue to modernize the total force as well as equip three new
divisions being organized within overall strength, modernize the ammunition
production base, assess and improve the responsiveness to military needs of
the nation’s industrial base, modify materiel acquisition procedures, adjust
troop stationing assignments to meet housing limitations

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and maneuver requirements,
and maintain an effective force despite the sweeping adverse effects of inflation.
Taking note of “spiralling inflation and constant underfunding,” Secretary of
the Army Howard H. Callaway stressed in his 1976 budget presentation to the
Senate Appropriations Subcommittee that “we have not been disbursing plenty,
we have been distributing scarcity.” This chapter discusses some of the details
of logistic operations through the year.

Force planning, a continuing
activity in the military services, is as important in logistics as it is in
operations. The logistic force structure as well as the combat elements must
keep abreast of organizational and technological developments, and logistic
requirements are constantly measured against the changing Army force level.
This year for the first time the U.S. Army Logislatics Evaluation Agency used
simulation and gaming methods to analyze the total Army force, deduce the proper
quantity and mixture of logistic units, and detect inadequacies in future combat
support capability. Deficiencies were identified in the 1978-82 five-year total
force analysis and addressed in the 1979-83 review Logistic force structure
doctrine was modified to conform to anticipated requirements.

Numerous planning and management
techniques, procedures, and programs are required to insure that an organization
the size of the Army is run efficiently. The plans and programs through which
the procedures and techniques are brought into play are comprehensive in Army
application and often extend into the joint services realm, for the Army is
only one element of the nation’s defense structure.

In September 1975, for example,
the Army established a Planning Factors Management Office at Fort Lee, Virginia,
to collect data and develop standard resupply planning factors, and in September
1976 the Joint Chiefs of Staff directed that the Army and the other services
provide approved logistic factors annually for inclusion in the Joint Strategic
Capabilities Plan. The senior logisticians of the Army Logistics Policy Council
had already met in April 1976 at Fort Lee to be briefed on selected logistic
topics and had published classified proceedings in which certain actions were
assigned to elements of the departmental staff.

One of the essential elements
of the Army’s logistic operations is the Logistics System Master Plan, which
provides for central control through a process of management by objectives.
This year’s objectives were published in July 1976; those for 1977 will be refined
so that they can be integrated into the Department of the Army programing system.

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The success of programming
and master planning is dependent today to a large degree upon standardization
of data elements. The Army uses data elements in such areas as general and financial
administration, mobilization and forces, personnel, logistics, medicine, procurement,
research and development, intelligence, and security. Within the past eighteen
months, some 800 Army data elements and items were standardized. The U.S. Army
Materiel Development and Readiness Command was designated as executive agent
for the Deputy Chief of Staff for Logistics. A handbook will be issued in early
1977 to implement the standardization program and insure its compatibility with
the overall Defense program.

The importance of standardization
is evident in the Army’s master data file which contains basic logistic data
on nearly one million items of supply. The file must be kept current and be
made available to users, who in some cases have automated equipment. Updated
information is furnished monthly, with tapes for users with automated equipment
and microfiche for the remainder.

Army logistic support extends
from internal to interservice and international levels. Internally during the
year, the logistic organization of the division was examined in light of logistic
support changes at higher levels and of the sixteen-division force objective;
the existing division support command was found to be the most effective structure
for providing combat service support. Corps support command roundout was also
studied against the concept that reserve component logistic units will be used
to fill out active Army support commands in an emergency. This examination was
continuing as the year closed.

In the area of interservice
support, attention centered upon reducing support where the Army is not the
principal user. In the Western Pacific, for example, the Army, with only 23
percent of the service population, was providing 93 percent of the logistic
and community support. To reduce its support effort, especially in Japan and
Okinawa, the Army prepared a plan to transfer twenty-eight functions and 1,200
foreign national indirect hire civilians and 580 military people on Okinawa
and Honshu to other services and agencies. The plan was approved by the Department
of Defense on 16 August 1976, and most of the function transfers will be completed
before June 1977.

At the international level,
the Army had, before 1974, provided materiel support to selected allies who
were economically unable to establish contingency stockpiles. In December 1974
the Congress prohibited the services from using Defense funds to establish or
maintain stockpiles identified for use by allies (Section 514, Foreign Assistance
Act). In June 1976, however, the Congress removed this proscription, although
with certain limitations: stockpiles in non-North Atlantic

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Treaty Organization countries
must conform to annual ceilings specified by Congress; new stockpiles must be
on U.S. bases or bases used principally by U.S. forces; and annual increases
must be reported by the president to the Congress. Within these limitations
it became possible once again to develop and maintain contingency stockpiles
for use by selected allies in situations favorable to the national interest.

Because of worldwide troop
deployment and interservice and international support responsibilities, Army
managerial expertise is constantly tested across the full range of logistic
operations. In no area is the challenge sharper or more comprehensive than that
of ammunition supply. During the year staff and regulatory agency inspectors
at Defense and Army levels visited U.S. ammunition facilities around the world
to appraise their adequacy and check upon explosives safety, physical security,
surveillance, maintenance, demilitarization, equipment, and personnel qualifications.
The U.S. Army Materiel Development and Readiness Command’s Ammunition Center
at Savanna, Illinois, was designated to survey and review ammunition operations
on behalf of the Department of the Army in accordance with Army Regulation 700-13
and, as the year closed, was preparing a schedule of visits to various commands
starting with Korea in December 1976.

Deciding where Army elements
are to be stationed and what facilities they require has not only military but
also broad political and economic implications. The Army’s network of installations
evolved over the course of the nation’s history and was especially affected
by the mobilizations of World Wars I and II. Installation populations expand
and contract during emergencies and are influenced by changes in Army strength
and organization even in peacetime. The last comprehensive review of Army installations
in the United States occurred in 1973. In 1976 the Secretary of Defense directed
that a long-range plan be developed to identify bases that the services will
need in the United States in the next twenty years, so that they will be protected
from commercial encroachment and earmarked for further investment. The Deputy
Chief of Staff for Logistics was directed to prepare a summary of events since
1969 in the logistic area, including installation closures and consolidations
as well as changes in command structure, that had had a measurable impact upon
the support structure.

If any single word characterized
developments in the field of logistic systems at the three-quarter point of
the twentieth century, that word would be “standardization.” A number of systems
with standardization as their aim were in various stages of development during
1976, with progress marked by refinement rather than by the completion of

[90]

major phases. This was true
of the Standard Army Ammunition System, which continued to provide automated
support of theater-level Class V management in both major overseas theaters;
of the Standard Army Maintenance System, within which development of the detailed
functional system requirement proceeded; and of the Direct Support Unit Standard
Supply System, where modifications were in progress to accommodate both divisional
and nondivisional direct support supply functions.

The Standard Property Book
System, designed to handle many property accountability functions by computer,
was refined in 1976 to the extent that all legal requirements for accountability
were met. The system passed its system integration test, a verification of correct
interaction with other computerized systems.

In the report year the Standard
Army Intermediate Level Supply Subsystem, which encompasses all logistic support
operations between the wholesale system in the continental United States and
the direct support and user levels in the United States and overseas, was extended
to Forts Belvoir, Eustis, Lewis, McClellan, Meade, and Riley. It is now operational
at twenty-seven of the thirty-six installations scheduled to receive it. As
the transition quarter ended, extension of the system to Europe began with the
2d Corps Support Command of VII Corps in Germany. An expanded version of this
subsystem was also under development, and the storage operations modules element
was installed in the U.S. Army Medical Command, Europe, in May 1976.

Concept development was begun
during the fall of 1975 on a Wartime Standard Support System for Foreign Armed
Forces. Under this system, the United States would provide materiel support
that friendly nations could not produce themselves or acquire through peacetime
arrangements with other nations. The requirements would be negotiated between
the foreign country and the United States and incorporated in a contingency
plan that would become operational upon congressional approval. During the fiscal
year, regulations were drafted and staffed within the Army, and coordination
was begun with the Joint Chiefs of Staff concerning enabling legislation.

There were several developments
during the report period in the U.S. Army Materiel Development and Readiness
Command’s five-year Automatic Data Processing Program, as well as progress in
the commodity command, depot, and international logistic systems. The Commodity
Command Standard System was placed in operation at the U.S. Army Electronics
Command in November 1975 and at the U.S. Army Armament Command in March 1976.
The Department of Defense Maintenance and Cost Accounting System was introduced
at a number of Army depots, and the Centralized Integrated System for International

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Logistics was placed in operation
at the U.S. Army International Logistics Command and at national inventory control
points.

The Total Army Equipment
Distribution Program (TAEDP) moved forward with the assignment of responsibilities
on the Army staff to complete a comprehensive system that will insure effective
equipment management, improve unit readiness, and provide a detailed projection
of equipment distribution down to the unit level within all Army components.
At the close of the reporting period, a study advisory group had been formed
to coordinate and monitor the actions that will be taken to complete the program.

Maintenance is just as essential
to total force readiness as research, development, training, and procurement.
How effective the Army is depends to a great extent upon how well its facilities
and equipment are maintained. The starting point for the whole process is funding.

In the 1976 budget presentations
to the Congress, the Secretary of the Army spoke of the adverse effects of insufficient
funds and inflation upon the operation and maintenance of the Army. Mr. Callaway
noted that “1975 funding shortages will cause us to begin fiscal year 1976 at
a disadvantage, while inflation will almost certainly strain our capabilities
even further.” He pointed to a “huge backlog of equipment to be overhauled”
and noted that “the annual shortfall in resources for upkeep and repair of facilities
continues to be a source of grave concern.”

The backlog of unfinanced
maintenance increased substantially in 1976. The rise was primarily attributable
to inadequate funds for repairing real property, although conscious efforts
throughout the Army to identify maintenance requirements also contributed to
the backlog. Backlog is intensively managed at all levels of command. Facilities
engineers regularly inspect their installations to update conditions; the responsible
major command and the departmental headquarters then validate the listings by
statistical sampling to insure accuracy and uniform application of standards.
Thus the management of backlog has progressed from a status of “poor visibility,
little reliability” in 1974 to a carefully controlled program of identification
and validation. Against this background, the operation and maintenance backlog
as of 30 June 1976 was $538 million; by the close of the transition quarter
on 30 September 1976, the figure had increased to $1.19 billion.

The Army’s best efforts have
gone into improving depot maintenance management. In the report period a system
was developed incorporating data for total depot planning, including supply,
maintenance, and base operations. Depot profiles were developed to assess capacity
utilization in Army vehicle and aeronautical maintenance facilities. Budget
docu-

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mentation forms were centralized
and automated, and depot maintenance master plans were prepared covering a five-year
span. Industrial surveys of organic depot maintenance facilities were instituted
to improve installation effectiveness, and an interservice support organization
was established in the U.S. Army Materiel Development and Readiness Command
to improve support in this area.

Recent emphasis on construction
that would enhance career attractiveness for the soldier—troop housing, medical
facilities, community accommodations—has lowered priorities for maintenance
facilities. To focus attention upon the need for investment in maintenance facilities,
the departmental headquarters canvassed the Army in 1973 for a comprehensive
report on maintenance facilities requirements. Replies identified a need for
a $933 million expenditure to replace outdated World War II facilities as well
as to compensate for outright shortages. The Committee on Appropriations in
its report to the 92d Congress confirmed the requirement. Since that time, with
shifts in the Army’s stationing installations plan and reorganizations, the
worldwide maintenance facilities requirements have been reevaluated. The revised
estimate of $1 billion has been included in the 1978-82 Program Objective Memorandum,
a submission that includes a Corps of Engineers funding schedule to systematically
reduce the shortage.

During the year the Army
Logistics Evaluation Agency studied ways to improve mutual maintenance support
between the active Army and the reserve components. The study, conducted between
January and August 1976, revealed a potential for considerable savings of money
and man-hours through increased use of intraservice support agreements.

Along another line, the U.S.
Army Training and Doctrine Command developed a logistic support concept for
general support maintenance within the corps. It emphasizes combat-oriented
support procedures and organizes the maintenance unit around specific items
of equipment. For example, all general support maintenance in the corps for
armored vehicles would be done by one general support maintenance unit. The
concept will be tested during 1977 and 1978.

In 1971 the Army started
phased maintenance for each mission/design/series aircraft system based on condition
rather than calendar time or flying hours. The project test, titled Inspect,
was completed this year, and phased maintenance was begun on the UH-1 and CH-47
helicopters; remaining aircraft were scheduled on a system-by-system basis through
1978. The technique increases aircraft availability and operational readiness
and decreases maintenance time and spare parts consumption.

In light of its Vietnam experience,
the Army changed aviation maintenance from five to three levels. An integrated
direct support capability—Aviation Unit Maintenance—was established at company
level to

[93]

provide responsive mission
support. Direct and general maintenance support levels were consolidated into
one intermediate level—Aviation Intermediate Maintenance—to provide support
in the division and Army areas. Depot level maintenance remains essentially
the same. The concept was instituted in Europe, Korea, Alaska, and Hawaii. Introduction
into active Army and reserve component units in the United States will be phased.

At the turn of the 1975 fiscal
year, a Hospital Equipment Maintenance System prototype, a semiautomated management
information system to support the preventive maintenance program for equipment
installed in hospitals, was tested at the Dwight D. Eisenhower Memorial Hospital
at Fort Gordon, Georgia. The concept of scheduling recurring maintenance was
extended to other than hospital equipment, in fact to all facilities engineering
equipment maintenance. The system was appropriately renamed Facilities Engineering
Equipment Maintenance System.

Much of the materiel that
flows through the Army depot system is financed by the Army Stock Fund, a revolving
fund established to finance inventories of supplies and other stores and to
provide working capital for industrial-type activities. The fund is replenished
through annual appropriations incorporated in the Army’s budget.

Stock fund obligations in
the first twelve months of fiscal year 1976 totaled $3.7 billion to support
$3.7 billion in net sales. Obligations were $0.1 billion above the previous
year, and sales were $0.3 billion higher. Insofar as the transition quarter
is concerned, demands and sales estimated at an annual rate were higher than
those in 1976, while obligations were lower as a result of review and cancellations
of some materiel orders.

Inflation has produced an
annual rise in the cost of materiel. In an attempt to stabilize prices, a 15
percent surcharge was added to the standard prices of all categories except
subsistence, clothing, medical materiel, and petroleum products. Despite this
attempt to correct imbalances, a serious liquidity problem marked stock fund
operations during the first eight months of the year. Cash advances against
future billings and a campaign to secure payments of accounts receivable led
to an improvement in cash flow and cash balance in the last half of the report
period.

The Army was authorized to
obligate approximately $304 million of the procurement appropriation for secondary
items in 1976 as opposed to $277 million obligated in the previous year. Users
returned about 20 percent more parts and assemblies in 1976 than in 1975. In
the transition quarter $48 million in obligational authority was used and $157
million in materiel was returned.

[94]

In December 1975 the Army
placed a moratorium on turning in to property disposal officers excess items
owned by the Army but managed by the General Services Administration or the
Defense Supply Agency. This was done to preclude the loss of materiel that might
be needed elsewhere in the Army. Also, procedures were developed for returning
excess items to certain Army depots to be redistributed to meet the needs of
other Army users.

To improve supply support
to U.S. Army, Europe, and Seventh Army and reduce shipping time, the Army in
January 1976 asked the Defense Supply Agency to move certain stocks to the New
Cumberland Army Depot in Pennsylvania. The agency, in turn, recommended an appropriate
stockage range for the small, fast-moving items the Army identifies as important
to the readiness of forces in Europe. The stock relocation will be completed
by February 1977.

Army transportation uses
all types of conveyance (vehicle, rail, ship, plane), carrying all categories
of cargo (passengers, equipment, supplies), in all kinds of situations (peacetime,
contingency, wartime). Out of the routine that involves all of these elements,
a number of activities occurred during the report period that are worthy of
mention.

In the area of passenger
travel, a ruling by an administrative law judge in October 1975 challenged the
legality of Category Y tariffs. These are the special procurement arrangements
that allow the Department of Defense to purchase blocks of seats on regularly
scheduled commercial flights to move military personnel and their dependents.
It is an option that allows Defense-sponsored passengers to receive the same
standard airlift service provided to the general public but at the less costly
planeload charter rate. Operationally, it offers greater travel flexibility,
since the block seating arrangement, in place of the normal planeload charter,
increases the number and frequency of flights that Defense-sponsored passengers
may use. Continuation of Category Y flights is contingent upon action by the
Civil Aeronautics Board. Should that be unfavorable, it is anticipated that
the Department of Defense would ask the Chief Executive to intervene.

To improve airlift for military
personnel making a permanent change of station, the Army asked Defense to restrict
the use of cargo aircraft for scheduled passenger movements. Previously the
Military Airlift Command (MAC) had substituted C-141 cargo aircraft, with limited
passenger accommodation, for the chartered commercial aircraft normally used
on scheduled passenger routes. While this substitution benefited command operations,
it eroded the service provided to Army-sponsored passengers. Following the Army
request, a policy was established

[95]

whereby the Military Airlift
Command may substitute cargo aircraft for passenger movement only with advance
agreement by the service sponsoring the airlift.

In a review of MAC passenger
operations, the Defense Department’s Audit Operations Office expressed the view
that substantial savings would be possible if the military services eliminated
intermediary passenger reservation service and permitted installations within
the United States to deal directly with the MAC Passenger Reservation Center.
A six-month test was established for passenger traffic overseas. Fort Hood,
Texas, Fort Jackson, South Carolina, Fort Lewis, Washington, Fort Sill, Oklahoma,
and the U.S. Army Service Center for the Armed Forces in the Pentagon were selected
as the Army’s participants. The test was highly successful; the time required
to process reservations was markedly reduced and operational flexibility was
improved. The Army recommended that the procedure be applied throughout the
United States, with the Military Traffic Management Command to continue to perform
its traffic management function for outbound Army traffic. The expansion will
begin in the coming year.

The Defense Department also
directed that the Military Airlift Command test the feasibility of flights between
Philadelphia’s commercial airport and air terminals in Spain and Italy. A nine-month
test began in February 1975 with MAC planes flying from Philadelphia to the
U.S. airbase at Torrejon, Spain, the Naval Air Facility in Naples, Italy, and
the Aviano Air Base in northeastern Italy. The test was successful, and permanent
military airlift service between Philadelphia and the Mediterranean area was
recommended.

Several developments during
the report period concerned the movement of personal property of military members
and their families. One was an effort to develop a Defense automated personal
property system. Another was to amend the joint travel regulations to permit
military personnel to move their goods by rented or privately owned vehicles
and, as an incentive, share the savings over commercial movement. The Army tested
this method, though without the incentive provision, at six installations, for
a saving of $145,207 on 498 shipments in an eleven month period. In the four-month
period from 1 June to 30 September 1976, with 672 “do-it-yourself’ shipments,
the Army saved $190,807 and military members received incentive payments of
$115,752. Seventy seven percent of the shipments were made by persons in grade
E-4 to E-7; they collected 70 percent of the funds paid as an incentive.

Coupled with these actions
in the household goods shipment field, the Military Traffic Management Command,
in coordination with the military services, began testing methods for evaluating
commercial household goods carriers and directing shipments to those which provided

[96]

high-quality service at a
reasonable cost. From May 1975 through April 1976, shipping data was collected
and evaluated on domestic household goods shipments moving from three selected
test installations: Fort Hood, Fort Sill, and Redstone Arsenal. Similar data
collection was started in May 1976 for all installations in the United States,
and the system holds great promise for improved carrier service.

Shipment of personal vehicles
also became a subject for special attention with the start in February 1976
of a Defense import control program. This program, a result of Federal and State
environmental requirements, calls for removing catalytic converters from cars
before overseas shipment and reinstalling them upon return. The work is performed
at personal expenses in service exchange facilities near ocean terminals.

The constant and heavy flow
of American military personnel returning to the United States from overseas
destinations has created a major inspection requirement which the Department
of Defense shares with the U.S. Customs Service (USCS). To meet the requirement,
the Customs Service trained military customs advisers during the year, maintained
customs advisers in overseas military areas, granted accreditation to military
commands, and refined inspection criteria. The Customs Service and the Department
of Defense cooperated to keep the military transportation system free of contraband
and in compliance with customs regulations. The Department of Agriculture also
participated by supplying lists of prohibited food items for meals served on
Military Airlift Command and contract flights.

Considerations of size, distance,
and geographical distribution in the Army’s overseas deployment suggest the
magnitude of the logistic support task and the transportation management problems
of movement and terminal operations. Both of these elements are brought together
and automated under the Terminal Operations and Movements Management System.
Improvements in the Standard Port System—the terminal operations portions of
the overall system—were completed, and development was begun on the intransit
cargo segment of the Movements Management System. The purpose of the combined
program is to keep close track of theater cargo and relieve traffic congestion
within theaters. Related to this system in the management field is the Defense
Intransit Item Visibility System, which calls for a joint service central data
bank. In July 1976 a joint working group began to prepare requirements and specifications
for the central data bank.

There was operational as
well as management evolution in transportation affairs during the period. In
the Atlantic region the Military Traffic Management Command assumed responsibility
for water terminals in northern Europe on 1 July 1976 and for the Leghorn, Italy,

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terminal on 30 September
1976. Planning continued for an extension of this responsibility to the Pacific
region and for a redistribution of watercraft in that area to correspond with
organizational changes. Two DeLong pier barges were transferred from Thailand
to Korea, and a transfer of two more from the United States to Europe was scheduled
for the spring of 1977.

The Army continued to refine
containerization procedures, giving special attention to container availability,
port capacity, and containerized movements of ammunition by ship and rail and
attendant safety problems. Safety was also a central consideration in Operation
Rocking Force, a project using CH-47 and C-141 aircraft to move Sprint and Spartan
missile warheads from remote launch sites to storage.

Automobile procurement came
in for its share of attention when the Army and the Air Force conducted a cost
analysis to see whether certain administrative vehicles might be profitably
purchased from European manufacturers. Because of the long-range aspects of
such an arrangement, the Army had certain reservations about the proposal and
recommended that the Department of Defense study it to see if the benefits justified
the purchase. Meanwhile, the Army was authorized to buy 315 intermediate (Type
II) and nineteen regular (Type III) sedans for use by military police and to
support the United Nations Military Armistice Commission and the Neutral Nations
Supervisory Commission in Korea and certain essential commanders.

In addition to dealing with
the operating aspects of logistic transportation, the Army conducted a number
of strategic mobility studies to refine requirements, develop alternatives,
and identify elements to be incorporated in strategic mobility program objectives.
The House Appropriations Committee surveyed Defense strategic lift requirements,
reviewing Army programs bearing on the subject. The Army prepared a strategic
capability assessment for the Secretary of Defense to use in discussions on
U.S. strategic lift and unit closure times with the defense ministers of the
North Atlantic Treaty Organization. Movement control requirements and capabilities
in U.S. Army, Europe, were also reviewed, and the findings will be used in transportation
planning for wartime.

For fiscal year 1976 and
the transition quarter the President’s budget included $999 million for military
construction, and the Congress appropriated $827 million. The request emphasized
facilities that would benefit the soldier and take account of the pressing need
for energy conservation, pollution abatement, and nuclear weapons safety. Consideration
also had to be given to the continuing requirement for a sixteen-division force.

[98]

All of these concerns were
carried forward in the preparation of the budget for the coming fiscal year.

Two projects were approved
for reprogramming: a $1.385 million project, later increased by $0.139 million,
for a TRI-TAC Joint Test Facility at Fort Huachuca, Arizona, and a $7.363 million
project for armament development facilities at Picatinny Arsenal, New Jersey.
Contingency funds for schools in Germany and a laser test facility in New Mexico
were also approved.

The following chart portrays the Army’s military construction projections in
the five-year Defense program for the 1978-82 period. Dollars are expressed
in millions, represent total obligational authority (TOA), and are related to
a fiscal year 1977 base:

Fiscal Years

1977

1978

1979

1980

1981

1982

Major construction

$467

$755

$877

$953

$1,008

$1,082

General authorization

66

79

68

64

93

93

Nato infrastructure

80

90

90

90

90

90

Total

613a

924

1,035

1,107

1,196

1,265

aNew TOA approved by Congress.

During the period of this
report no changes were announced concerning the status of installations. Several
that had been previously scheduled were completed: Fort Hamilton, New York,
became a subinstallation of Fort Dix, New Jersey, and Pueblo Army Depot in Colorado
and Savanna Army Depot in Illinois were reduced to depot activities. In the
National Capital Region the Army announced on 1 April 1976 that it would study
the possible closure of Vint Hill Farms Station in Virginia and the relocation
of communications and security activities from Arlington Hall Station on the
outskirts of Washington, D.C. Also to be studied was the possible relocation
of the headquarters of the U.S. Army Medical Research and Development Command
from the Washington area. In this connection, the Army was directed to reduce
its population in the National Capital Region by 500 military and 500 civilians
by 30 September 1977.

As noted earlier the Secretary
of Defense in July 1976 directed that along-range base structure plan be developed
to identify essential major installations in the United States twenty years
from now and beyond and that a base structure model be prepared to facilitate
planning for the development and retention of these bases. Data was collected
and force projections developed for the twenty-year period, and evaluations
were in progress as the year closed.

To assist in planning, the
Army developed a new concept for computerizing mobilization requirements and
identifying the cost of expanding installations to capacity to accommodate additional
troops. An installation expansion capability guide was drawn up using standard
lay-

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outs to help match an installation’s
facilities and expansion capacity with the actual assignment of troops. The
layout areas are designed so that tents or wood or prefabricated housing can
be quickly fitted into the existing facilities pattern.

In 1973 a design guide series
was established to replace previously issued design standards. Criteria were
developed for planning and designing community-type facilities to meet the changing
needs of Army recreation and welfare programs. Eight architectural design contracts
were awarded, and by the end of 1976 design guides for Army service schools,
arts and crafts centers, auto crafts centers, and criminal investigation facilities
had been completed. Others for officer and noncommissioned officer clubs, recreation
centers, administrative office space, chapels and religious education buildings,
and military police facilities were being prepared.

In another design activity,
the Army participated in the Federal Design Improvement Program by sending representatives
from the twenty-one engineer field offices to the Engineer Design Improvement
Conference held in September 1976 to discuss military construction problems.

The Army’s attention to design
considerations was matched by its concern for the nation’s cultural environment
and commitment to historic preservation. A manual was distributed outlining
administrative procedures for a comprehensive preservation program to insure
that Army properties possessing historical, architectural, archaeological, and
cultural significance are protected. Seven sites were nominated for inclusion
in the National Register of Historic Places, and five were accepted.

For the first time the Corps
of Engineers in fiscal year 1976 provided funds directly to District Engineers
to be used to assist installations in master planning. The amount of $6.6 million
was allocated for this purpose in the report period. The Corps also developed
automated data processing objectives, priorities, and milestones to be used
at the headquarters and field operating agency levels in common management and
reporting systems related to the military construction program.

Modernization is a companion
activity to new construction in the Army’s construction program, and important
strides were made in 1976 in medical and dental facilities as a result of a
modernization drive begun by the Secretary of Defense in 1972. The 760-bed Eisenhower
Army Medical Center at Fort Gordon, Georgia, was completed and occupied in April
1976, at a cost of $35.69 million. It is the latest regional medical center
and will be used for training as well as specialized medical care. At Fort Eustis,
Virginia, additions and alterations to McDonald Army Hospital were completed
in January 1976 at a cost of $4.8 million. The new forty-bed Redstone Army Hospital
in Alabama,

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contracted at $9 million,
was about 60 percent complete as the year ended, and a $7.83 million contract
to renovate the Noble Army Hospital at Fort McClellan in the same state was
awarded in June. A sophisticated and innovative 241-bed medical care facility
for Fort Campbell, Kentucky, was in the design stage, and at Nuremburg, Germany,
an addition and alteration project for the U.S. Army hospital was under design.
Twenty-two Army dental clinics were also being designed or constructed using
a modular layout developed at Fort Lewis, Washington, in 1974.

Public Law 90-480 requires
that most Federally funded buildings be accessible to the handicapped, and the
Army in 1976 published a manual establishing policy, responsibility, and criteria
in this regard. Procedures have been established to assure that most new Army
facilities that are open to the public and employ the handicapped are designed
to comply with the criteria.

The Army is the construction
agent for all kinds of specialized facilities used by the military services.
One example is a building program to supply simulator facilities for use in
place of costly aircraft for flight training. More than forty of these facilities
have been programmed for construction through fiscal year 1983.

Construction support is provided
not only for the military services but also for other U.S. agencies and foreign
governments. During the report period, the Army handled construction projects
for the Air Force, the Navy, the Coast Guard, the National Aeronautics and Space
Administration, the U.S. Postal Service, the Energy Research and Development
Agency, national cemeteries and foreign governments. Contracts totaled $2.1
billion in the fiscal year, $1.7 of the total devoted to projects for foreign
governments. For the U.S. Air Force alone, the Army, through the Corps of Engineers,
acquired land and made improvements at eighteen Air Force bases for expanded
clear zones. One hundred and thirteen tracts with 1,700 acres of land and improvements
were acquired at a cost of about $4.3 million.

Working with the Environmental
Protection Agency, the Army also developed and administered a community noise
survey. Noise annoyance contours are being developed for Army installations,
where blasting, helicopters, industrial plants, weapons firing, and vehicle
operations contribute to noise pollution.

As with construction, the
Army is heavily involved in real property matters. It controls approximately
12,687,386 acres of military land which, with improvements, have an acquisition
value of over $13.2 billion. From July 1975 through September 1976, the General
Services Administration disposed of 15,165 acres of Army land and improvements
in the United States with an acquisition cost of over $74.4 million. An-

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other 63,088 acres with an
acquisition cost, including improvements, of over $90 million were reported
to General Services Administration as excess. At the close of the report period
there were 35,367 land use arrangements in force covering 5,988,513 acres for
which the Government was receiving annual rent of $11.2 million.

On behalf of the Army, the
Corps of Engineers acquired 172,771 acres of land in 5,114 separate tracts at
a cost of $94.3 million, primarily for civil works projects. About 11,891 acres
of this land were acquired for other agencies at a cost of $13.5 million, notably
for the National Park Service for recreation areas. In August 1976 the Army,
through the Corps of Engineers, executed an interagency agreement with the Federal
Energy Administration to provide real estate services in connection with the
strategic petroleum reserve program; to minimize the nation’s vulnerability
to interruptions of oil imports, petroleum products will be stored at underground
sites. The Corps also continued to provide relocation assistance to citizens
displaced by civil works projects.

About $948 million of operation
and maintenance funds were used for real property during the year, far exceeding
previous levels. Operation of utilities systems was a major factor in the cost
because of increasing prices of fuels and energy. The Army’s utilities bill
in fiscal year 1976 was close to $300 million and is expected to reach $350
million in 1977. While sufficient funds were available to pay for fixed requirements
in 1976—utility bills, salaries, fire prevention, custodial service, refuse
collection, pest control—resources for maintenance and repair were extremely
limited. The Army maintained a worldwide inventory of real property having a
replacement value of over $79 billion, and the major portion of the investment
is maintained with operation and maintenance funds, of which $400 million was
required in fiscal year 1976. The sum was not adequate to maintain all facilities
within established Army standards. As a result, the backlog of maintenance and
repair continued to grow, reaching an estimated level of $1.2 billion.

The sheer size of the Army’s
real property dominion and the huge cost of operating and maintaining it on
behalf of the nation suggests the importance of comprehensive management and
central control. One of the primary management tools is the Integrated Facilities
System, an automated information and evaluation system that encompasses the
lifecycle management of real property resources from conception through design,
construction, operation, maintenance, and disposal. By January 1976 the prototype
test of the installation management portion of the system had been completed;
by the close of the report period this element was in operation at thirteen
installations highlighting work management deficiencies. The facility planning
and new construction elements will be brought in as system development continues.

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Army property management
is often complicated by jurisdictional considerations. One problem has been
that of Army installations located within a coastal zone. The Coastal Zone Management
Act provides for Federal funding for coastal states to develop management and
utilization plans for their coastal lands. The act is administered by the National
Oceanic and Atmospheric Administration of the Department of Commerce. Under
its provisions, Federal agencies, including the Army, are required to cooperate
with the coastal states in the administration of the law. Yet several of its
provisions proved to be contradictory: on the one hand, there is an “exclusion
clause” which Federal agencies have interpreted as relieving them of mandatory
compliance, on the other hand, there is a “consistency clause” which requires
them to adhere to approved coastal zone management plans as fully as possible.
On 10 August 1976 the Attorney General issued a clarifying decision, and the
Army now proceeds on the understanding that it has full power to control lands
on Army installations located within a coastal zone irrespective of state jurisdictions.

The Corps of Engineers continued
to serve as the executive agent for construction of recruiting facilities, exercising
its own authority and working through the General Services Administration. The
program embraces new construction, relocations, and improvements to existing
facilities. As of the close of the report period, there were 5,757 recruiting
offices in operations.

One of the difficult problems
that face facilities engineers is that of detecting entrapped moisture in roofing
and underlying insulation. If this moisture can be detected in time, serious
damage can be avoided and repairs made. As wet areas in roofs conduct heat more
readily than dry areas, heat transmission can be detected by infrared techniques.
Roofs at Army installations are now being surveyed by hand-held infrared cameras
and aerial infrared detection methods. Infrared photography is also being used
to locate heat loss through building walls and to detect overheating in electrical
equipment such as transformers.

Although security of military
installations and materiel has been necessary from time immemorial, the problem
has acquired new dimensions in today’s activist society. Demonstrations, hijackings,
bombings, arms traffic, and other kinds of terrorist activity have raised the
level of the threat to military facilities and required tighter security measures.

Late in calendar year 1976
the Army began to install interior intrusion detection systems in Army storage
facilities. Upwards of 2,700 such systems will be operational by the end of
fiscal year 1977, and additional systems will be installed in other areas as
equipment becomes available.

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Tests have confirmed that
this equipment is suitable for protection of post exchanges, commissaries, service
clubs, and many other facilities. Arms, ammunition, and explosives, which are
very vulnerable, were the object of improved protection. Measures taken were
upgrading structural standards for new and existing storage facilities, controlling
access to such facilities, tightening inventory and accountability controls,
installing security equipment, and investigating losses.

On 22 January 1976 the Vice
Chief of Staff approved the report of the Physical Security Review Board on
Chemical Agents and Munitions Security. The report called for raising chemical
security to nuclear security standards by increasing guards, training inventory
personnel, and rewarehousing to meet more secure storage requirements. At the
same time, Patrol and Explosives Detector Dog Teams were authorized for the
Military Police Working Dog Program, and these teams will be assigned to protect
Army facilities. New regulations were also issued covering intransit security
of arms, ammunition, and explosives on all modes of transportation, and a regulation
on physical security of reactor facilities was drafted and distributed for review
and comment.

Security of Army aircraft,
vehicles, and associated components continued to receive priority during the
year. Ignition and door locking devices were installed on Army aircraft, and
locking and other security requirements for vehicles were disseminated along
with summaries of specific instances of security breaches and recommendations
for improving vehicular security. The Army also contracted with a research firm
for a study on how to counter terrorism on military installations.

Two elements make up the Army’s security assistance logistical support: the
grant aid Military Assistance Program (MAP) and the purchase-oriented Foreign
Military Sales Program (FMSP). They complement each other and have foreign policy
as well as Army logistical significance.

During the report period,
Army security assistance under these programs reached eighty foreign countries
and four international organizations. New orders amounting to $3 billion covered
materiel ranging from uniforms to missiles and included technical services,
training, and foreign military construction projects. The combined undelivered
balance under both programs at the end of the period was $13.5 billion.

A steadily increasing demand over the past several years for American technology,
materiel, and services offered under the Army’s Foreign Military Sales Program
has benefited national security. In addition to enhancing U.S. rapport with
foreign governments, the program has fortified the willingness of friendly nations
to support U.S. base and

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overflight arrangements, furthered standardization of military equipment among
them, and stimulated cooperative logistical agreements between the Army and
various foreign governments and international organizations. Foreign sales have
also helped to maintain an active production base, and the larger runs made
possible by combining American and foreign orders are more economical. The training
provided to foreign military personnel also encourages individuals, armies,
and governments to support U.S. interests.

At congressional direction
the grant aid provided under the Military Assistance Program was gradually reduced
during the past year. Between June and September 1976 the number of military
assistance advisory groups was cut from forty-four to thirty-four. Legislation
restricted new MAP grants to twenty countries in fiscal year 1976 and twelve
in 1977; in addition, ceilings were placed on aid to eight nations in both years.
Except for congressional authorization for specific countries for specific amounts,
the Military Assistance Program is scheduled to be terminated by 30 September
1977, with prior commitments completed by 1980.

Grant material and logistical
services provided by the Army were materially reduced from the $800 million
level of 1975 to $60 million during the fifteen-month fiscal year. The reduction
resulted not only from legislative decisions, but also from the increasing capacity
of foreign nations to support themselves. Based upon current commitments, grant
aid material and logistical support for the report period went to thirty-one
countries. Grant aid was suspended for Turkey in February 1975 and Lebanon in
April 1976; aid terminated for Greece at its request in January 1973 was renewed
in June 1976. Total grant aid for all countries since the beginning of the program
in 1950 and through the end of fiscal year 1976 was about $19 billion in material
and services.

In contrast to the relatively
small grant aid program, various countries and international organizations placed
about $2.9 billion in new orders during the year. The dollar value of new orders
for materiel and the logistic services declined from $3.9 billion in 1975. The
grand total of the program since its start in 1950 is $21.2 billion. Highlights
of the program (new orders) in the current period appear in the following table:

FOREIGN MILITARY SALES1 July 1975-30 September 1976(In millions of dollars)

Israel

$143.2

Saudi Arabia

1,398.0

Iran

768.8

Greece

90.0

Turkey

21.1

Republic of China

126.0

Japan

$14.0

Korea

81.0

Philippines

25.8

Thailand

7.6

Latin American

33.2

In addition to the grant aid and sales of major end items and services, the
Army provided repair parts for major end items and weapons systems of U.S. origin
through supply support arrangements. Under these

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arrangements the foreign
country buys into the Army’s supply system using its supply procedures, systems,
and facilities on the basis of contracts. These supply support arrangements
are renegotiated annually and were in force with twenty-one countries for over
1,500 separate items at a cost of $336 million.

Nineteen coproduction programs
were in force during the period with Japan, Korea, and Taiwan, amounting to
about $2.1 billion, of which about $1.2 billion would be returned to the U.S.
economy. Included were rifles, tactical radios, trucks and general purpose vehicles,
mortars, and missile system items. Among the major programs were Japan’s manufacture
of over $8 million of missile system parts and components; the Republic of China’s
$50 million worth of ammunition, helicopters, and trucks; and Korea’s $81 million
worth of ammunition, missiles, launchers, and repair parts.

Effective with the billing
quarter beginning 1 January 1977, the U.S. Air Force, as Department of Defense
executive agent, will assume the billing function, cash collection, trust fund
accounting, and administrative fee management of the Foreign Military Sales
Program. The Army transferred the trust fund cash and program files for Saudi
Arabia, Iran, and Israel on 20 November 1976. The balance of the trust fund
cash will be transferred on 31 December 1976 and the balance of the audited
files by 20 June 1977.

As a result of statutory
changes and revised Defense directives, new pricing guidelines were established
this year. Rather than basing pricing essentially on procurement costs at the
time of manufacture, the services will use replacement value at the time of
sale to replace exhausted stocks. Billings will include add-on charges to insure
full recoupment for the use of Defense materiel, facilities, and services. In
appropriate cases, reductions are granted when warranted by product demand,
useful life, and condition.

Based upon congressional
intent and General Accounting Office guidelines, course tuition costs for foreign
student training were switched from an incremental method, under which fixed
or constant costs were not included, to a pro rata basis which considers all
costs, indirect and fixed, and distributes them over specific elements of operation
such as population, hours, or course length. This method insures that foreign
governments pay a fair share of course costs for their students.

There were a number of reciprocal
visits connected with international logistics during the year. Army representatives
participated in negotiations in various countries, especially where large purchases
of U.S. equipment were involved, and representatives from Ethiopia, Jordan,
Kenya, the Netherlands, Peru, and Saudi Arabia visited the United States to
discuss their needs and make purchase arrangements.